Audit 367479

2024-002: Allowable Costs – Social Security State Grants for Work Incentives Assistance to Disabled Beneficiaries – Federal Assistance Listing Number 96.009; Award Period: Year ended September 30, 2024. Allowable costs - Protection and Advocacy for Individuals with Mental Illness Assistance - Federal Assistance Listing Number 93.138; Award Period: Year ended September 30, 2024. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Center allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Context: The amount allocated to the federal awards for numerous employees differed from the amount that was actually worked on the grant based on timesheet and approved pay rate. Cause: The Center allocates all of payroll based on hours worked on each program, rather than actual dollars spent on payroll for each program. This allocation method is appropriate for administrative employees who do not directly track their time to grants, but not for those who do. Effect: The Center billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect are under the questioned costs reporting threshold. Recommendation: We recommend the Center change its process to allocate payroll based on actual dollar amount rather than hours for employees who track their time across the grants. This will result in more accurate allocation of expenditures to federal programs. Views of Responsible Officials: dLCV will implement a weighted direct bill process beginning October 1, 2025. Throughout the audit review, and as recently as one month before the final report, the auditors consistently reported to us that this was likely not a compliance issue. Additionally, the auditors were not able to provide any sample for any time period in 2024 showing the potential impact of changing from an hours allocation to a dollars allocation. The auditors did not inform us of their changed opinion until late August, 2025, making it impossible to make any adjustments in the current fiscal year.

2024-003: Allowable Costs – Social Security State Grants for Work Incentives Assistance to Disabled Beneficiaries – Federal Assistance Listing Number 96.009; Award Period: Year ended September 30, 2024. Allowable costs - Protection and Advocacy for Individuals with Mental Illness Assistance - Federal Assistance Listing Number 93.138; Award Period: Year ended September 30, 2024. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Center allowed payroll related costs to be submitted for reimbursement under the grant derived from timesheets that were not properly approved. Context: There were several timesheets without proper approval. Cause: There is a lack of proper review of timesheets. Effect: The Center billed payroll based on timesheets that were not properly approved. This risks the amount of payroll billed to the federal programs being inaccurate. Questioned Costs: Unknown. Recommendation: We recommend the Center ensures that timesheets are properly approved prior to processing payroll and billing to federal programs. Views of Responsible Officials: dLCV has refined our policies regarding review of timesheets to ensure that all timesheets are timely submitted and are reviewed and approved by designated staff.